HDHP insurance is one of the most affordable types of medical coverage on the market today. It does come with a higher deductible than the other types, which is why it’s able to embrace a higher sense of affordability. The upside is that once you reach your annual deductible set forth by your insurance company, you’re completely covered for the remainder of the calendar year.
The Basics of How HDHP Insurance Works
The name says it all, you’ll be responsible for paying a higher deductible for this type of medical insurance. However, once you reach the annual deductible, they will cover the rest. In exchange for the commitment to paying a high annual deductible, you can expect lower premiums.
A common way that many overcome this is by opening an HSA (Health Savings Account) so that they have the funds there should the need arise. One of the strongest strategies is to work towards having your annual deductible in your HSA so that it’s all there. By the way, your contributions to this type of savings account can come prior to any taxes being taken out, giving you a great tax advantage.
The Benefits of High Deductible Health Insurance Policies
Many often wonder whether an HDHP policy has enough benefits to make it worth their while since they must pay out of pocket for their medical expenses at first. Below you’ll see the strongest benefits that these types of policies have to offer.
· A better selection of providers, unlike policies that require you to stay in-network.
Most insurance policies are strict when it comes to staying in their network of providers, but this is far from the case with HDHP insurance. You can embrace more freedom when it comes to who you choose to take care of your medical needs.
· Lower monthly premiums despite having a high deductible.
Since you will be required to cover the cost of your treatment and medications yourself until the deductible is met, you can save money when paying your monthly premium. It’s actually a lot more affordable than the other types of insurance out there.
· Your cost when paying out of your pocket isn’t the market rate.
This is because your insurance company has already negotiated the rates with providers to ensure that you don’t overpay. While it might feel like you’re not winning due to having to pay for medical expenses yourself prior to meeting your annual deductible, you really are.
In combination with an HSA (or any other liquid savings you may have), this can be a very strong option as it does help you save money on the premium. If you anticipate not being able to afford to pay for your medical expenses at first, you may want to take a look at some of your other medical insurance options.